A call option whose exercise price is less than the spot rate is said to be
A) in-the-money.
B) at-the-money.
C) out-of-the-money.
D) under-the-spot.

Question

Quizplus · Accepted Answer

A call option is considered to be in-the-money when the exercise price is less than the spot rate. This means that the holder of the call option can buy the underlying asset at a lower price than its current market value, making it a profitable option to exercise.

A Call Option Whose Exercise Price Is Less Than the Spot